Financial Analysis for Non-Financial Managers Programme Onboarding

In Launch Week, you will find guidance on how to make the most of the course, information on course completion and certification requirements, and an overview of the journey you will take over the next weeks. You will learn how to navigate the platform and about the different functionalities available.

You will also find out about your “Action Learning Project” (ALP). Your ALP is a unique opportunity to apply your learning to your own business context. The ALP will take you on a step-by-step journey to develop a financial perspective on a current business decision you are facing. You will identify a specific strategic opportunity and then quantify the predicted financial effects of various possible outcomes following a recommended action. During Launch Week, you will need to start thinking about the scope of your ALP and finalise it with your learning coach.

Note: In order to successfully pass this course, you must complete your ALP to a high standard. This is one of the most important components of the course. 

Financial reports provide information about how a company allocates its resources and how well it uses those resources to execute its strategy. Hence, financial acumen is a key part of successful strategic thinking. With this in mind, we begin by discussing the balance sheet and income statement, which are the two key financial statements. We discuss why these statements are presented to investors and the information they convey. We then deepen our understanding of financial reports and discuss how to use them to evaluate a company’s strategy execution. We discuss key financial reporting issues including the difference between cash and accrual accounting, capitalising versus expensing costs, and subsequently move on to studying the cash flow statements to understand the sources and uses of cash.

Learning Objectives:

• Build What information is contained in the Balance Sheet, Income Statement and Statement of Cash Flows?
• What information is missing from these statements?
• How are these statements connected to each other?
• How can I use these statements when making strategic decisions?

Financial information about the firm’s products, services, processes, assets, and customers provides managers with key inputs to understand the firm’s current performance and support value-based decision making. In Week 2, our main objective is to equip you with the ability to understand and evaluate profitability information from the perspective of a manager inside the organization. We begin by considering cost and profit behaviour and how profitability is determined. We then apply this analysis to any unit within the organization: company, division, product, and even to individual customers. This week will give participants a deeper understanding of the financial information they receive as managers, how to interpret and use it, and insight as to what questions to ask. 

Learning Objectives:

• Why is it necessary to understand cost behaviour?
• How do costs behave?
• What financial information should I focus on – and what should I ignore when making strategic decisions?
• How can I effectively measure profitability?

In Week 3, you will gain a comprehensive understanding of key financial performance measures and their implications for organisational success. We will start by defining two vital performance measures, Return on Equity (ROE) and Return on Invested Capital (ROIC), and explore their significance in evaluating financial performance. We also discuss how these measures improve upon the ROA metric defined in Week 1. Additionally, you will learn how to evaluate management's effectiveness in converting sales into profits and utilising resources to generate sales. Furthermore, we will delve into other solvency financial statistics that provide insights into an organisation's financial health. 

Learning Objectives:

• Define two key performance measures: Return on Equity (ROE) and Return on Invested Capital (ROIC)
• Evaluate how management converts sales into profits
• Evaluate how management uses resources to generate sales
• Understand other solvency financial statistics that measure financial health

In Week 4, we will explore the topic of financial decision-making and prospective analysis. We will delve into the process of making informed decisions based on forecasts, considering the company's past performance and various future factors such as new product launches, market expansions, and workforce expansions. You will learn how to effectively evaluate and anticipate the company's future performance by incorporating all available information. Additionally, we will discuss the concept of valuation, equipping you with the knowledge and tools to assess the intrinsic value of a company. By the end of this week, you will have a comprehensive understanding of financial decision-making, prospective analysis, and valuation, enabling you to make informed and strategic financial decisions in a dynamic business environment.​

Learning Objectives:

• Forecast financial performance using historical data and analysis of the sustainability of current strategic choices
• Link forecast to the generation of cash flow 
• Understand time value of money and how to make an informed choice between different projects
• Link cash flow to sustainable value

So far, we have learned how successful managers use financial information to make value enhancing decisions. In our final week we discuss how best to evaluate the personnel who make decisions throughout the organization. We will develop tools to evaluate the performance of managers and their divisions’ performance. We introduce and evaluate some commonly used financial performance metrics and consider their benefits and potential weaknesses for performance evaluation. We then consider how to link strategy to both financial and non-financial performance metrics to achieve organisational objectives, as well as the strengths and weaknesses of using performance measures to explicitly incentivize employees. 

Learning Objectives:

• What are the commonly used measures of performance evaluation?
• Under what conditions are these measures consistent with long-term value creation?
• When are these measures inconsistent with long-term value creation?
• How do you link financial and non-financial performance to your organisation’s strategy and objectives?

These two weeks are for you to synthesise your learning from the past few weeks into a compelling Final ALP Assignment submission. It will also offer an opportunity for you to give feedback to, and receive feedback from your peers for the Final ALP Assignment. No new course content will be released in these weeks.